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BTP: De Minimus Exemption Policy

Business Tax Policy: De Minimus Exemption Policy

Individuals (including joint filers) with gross income everywhere that is less than $20,000 will have simplified filing and reporting requirements available to them. Additionally, individuals whose only business activity everywhere is the ownership of two or fewer residential rental units can also use these simplified requirements as long as the total gross income from the one or two rentals is less than $50,000.

Under the simplified reporting requirements, individuals would be able to file a De Minimus Exemption Form (and supporting tax pages for the most recently completed tax year) in lieu of filing of the initial registration form and continued filing of the Annual Exemption Request Form that is generally required by the Bureau each year. Individuals can file the De Minimus Exemption Form one time and then they will have no other filing requirement until:

the activity exceeds the de minimus exemption threshold ($20,000/two residential units) described above; or

verification of the exemption is specifically requested by the Bureau.

Example 1: An individual or joint filer has a Schedule C (or more than one Schedule C) and the total gross receipts are less than $20,000. A De Minimus Exemption Form should be filed. This will set up an account with the Bureau that is considered de minimus and annual filings after this would not be required unless requested by the Bureau. If their gross receipts are $20,000 or greater in the future, they would need to file the Annual Exemption Request Form starting the year the total gross receipts are $20,000 or more.

Example 2: An individual or joint filer has two residential rentals that gross $12,000 each per year. They have no other business activity (Schedule C, commercial rental, sale of property, etc.). They can file the De Minimus Exemption Form even though the total gross income is $24,000. This will set up an account with the Bureau that is considered de minimus and annual filings after this would not be required unless requested by the Bureau. If they get a third rental property or sell one of the existing rentals properties, they would need to file the Annual Exemption Request Form if under $50,000 gross, or file a combined tax return if the gross receipts for the year equal or exceed $50,000.

Example 3: An individual/joint filer/sole proprietor has Schedule C income AND two residential rentals. The combined gross income is less than $20,000. They can file the De Minimus Exemption Form. This will set up an account with the Bureau that is considered de minimus and annual filings after this would not be required unless requested by the Bureau. If their gross income meets or exceeds $20,000 in the future, they would need to file the Annual Exemption Request Form.